Why Small Business Owners Should Consider ICHRA for Employee Healthcare | Oscar | Blog | hioscar Blog | Oscar
Why Small Business Owners Should Consider ICHRA for Employee Healthcare
If you’re a small business owner, it’s time to consider ICHRA as a way to offer health insurance.
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As a small business owner, you're likely all too familiar with the challenges of providing healthcare benefits to your employees. Rising healthcare costs have become a significant burden and are only projected to increase, while the administrative task of choosing and managing these plans adds to an already full plate.
The current healthcare model is inflexible and was designed for large employers—it was not built with small businesses in mind. It often requires high participation rates to qualify for group plans, which doesn't work for most small businesses, especially with the growing number of gig workers and alternative work arrangements. This situation often leaves many small businesses questioning whether or not it’s possible (or even feasible) to offer insurance at all.
If this sounds familiar, read on.
In 2020, the Individual Healthcare Reimbursement Arrangement (ICHRA) was introduced to shake up the group coverage market. Broadly, ICHRA opens up the ACA to employers and employees and represents a significant shift in how these groups can approach healthcare benefits.
As a small business owner, you can set a tax-free defined contribution amount for your employees, who can then use this allowance to shop for health plans on the Affordable Care Act (ACA) marketplace. This gives your employees the freedom to choose from a wide range of plans that best meet their personal needs while allowing you to stabilize your healthcare costs. You know better than anyone—your employees are smart people. They are more than capable of choosing their own health insurance.
Let’s explore the benefits of choosing ICHRA.
For small business owners, ICHRA offers several advantages:
Budget Stabilization: You can establish stable, tax-free benefit contributions, enabling more effective management of your healthcare benefits costs.
Reduced Administrative Work: By eliminating the need to manage a health plan or the associated health risks of your employees, you can focus more on your core business activities.
Versatility for Any Business Size: ICHRA is accessible to employers of all sizes, whether you have 5 employees or 5,000.
No Participation Requirements: With ICHRA it doesn't matter how many people enroll in your plan, or where they live or how many hours they work. It's easy to get started.
For employees, ICHRA provides:
Personalized Options: Employees can select a health plan that best suits their needs, like Oscar Health’s* suite of affordable, tech-savvy solutions. They can consider factors like specific providers, cost-sharing, and prescription coverage when choosing their plan.
Financial Flexibility: Employees can choose plans that fit their financial requirements and decide how to allocate their contribution dollars across various healthcare options.
Continuity of Care: They can maintain their primary care providers, networks, hospitals, and plan designs through different life stages.
If you’re interested in getting started, you can chat with your broker if you have one and tell them you want to learn more about ICHRA. Alternatively, you can go directly to an ICHRA platform to enroll.
TL;DR: If you’re a small business owner, it’s time to consider ICHRA as a way to offer health insurance. It moves away from the traditional one-size-fits-all group health plan model and places more choice and control in the hands of employees. It allows them to select coverage that best suits their personal circumstances while enabling employers to stabilize their healthcare costs by setting predictable contributions.
*Oscar Medical coverage is underwritten by Oscar Insurance Company and its affiliates.
